The HIA-CBA Housing Affordability Index improved by 2.1 per cent in the March quarter and chalked up a 10.8 per cent annual rise.

However, the HIA New House Affordability Index declined to -2.3 for the March 2014 quarter, indicating that the affordability of new houses continues to be somewhat less favourable than existing houses.

"Increases in home prices over the past year have been significant," said HIA economist Shane Garrett, "Sydney remains the least affordable market by any measure."

"However, the impact of lower interest rates and continued earnings growth has ensured that home purchase affordability has improved over the past year for existing homeowners and those on the cusp of entering the market in the short term," said Mr Garrett.

"We're talking about house purchase here, and at the moment its easier to purchase," said Mr Garett.

The Reserve Bank of Australia has signalled that interest rates are set to remain low for some time.